8 Retirement Investment Strategies for Canadian Retirees

After years of dreaming about what you will do in your retirement, it has finally arrived. You never thought the day would arrive that you could sleep in, stay awake later, eat what you want, and just enjoy your own company on your own time. Well, it’s here.

But there seems to be a problem: Money. Ah, yes, money – the fighting and worrying that money brings, as the old jazz standard goes.

Does it need to be as hectic and stressful? With the right retirement investment strategies in place, you could remove that stress and just live out your time on this planet smiling, dancing, and doing all the things you wanted to do in your youth but couldn’t because of —- you know…

Here are eight retirement investment strategies for Canadian retirees:

1. Tap into Non-Registered Savings

If you are beginning to touch your reserves, then be sure to begin with your non-registered savings instruments. These are funds in your savings accounts or investment accounts that are not pensions. So, your bank savings account or your gold bullion are examples of money you can use early without taxes.

By following these retirement investment strategies, you won’t trigger a clawback, a tax, or anything else the government uses to take the fruits of your labor.

2. Save Using TFSAs over RRSPs

Are you still saving in your retirement? This is a smart move, especially since we are living longer and need the capital to keep up. Even if you are not working and earning an additional income, you can still save, whether it is by having leftover grocery money or receiving a windfall.

Should you choose to save, then be sure to use a tax-free savings account (TFSA) instead of a registered retirement savings plan (RRSP). These are great retirement investment strategies for when you’re not earning a lot of money and want to earn interest on any cash you insert.

The ladder is good for high-income earners. Since you’re in retirement, a TFSA is the best option for you.

3. Stay Invested in Dividends

Many people are terrified of investing in the stock market, especially after the dot-com crash, the global financial crisis, and the recent volatility in equities. However, if you are someone who wasn’t afraid and purchased a handsome sum of dividend-paying stocks as soon as you started working (without selling), then you have accumulated a great chunk of change. So much so that you are earning a modest monthly or quarterly income.

That said, if you have just retired, then you should still stay invested in these dividend-paying stocks. Unless the company has just announced that it is slashing its quarterly dividends by 85 percent, you should continue to own shares because it is an income after all.

4. Invest in Safe-Haven Investment Instruments

Or, if you want to invest but are concerned about the violent swings in stock markets around the world, then you can consider safe-haven investment instruments, primarily products like guaranteed investment certificates (GICs). This offers a guaranteed rate of return, whether it is for 90 days or five years. It is a great way to generate interest on your capital.

5. Defer CPP or OAS Withdrawals

Most Canadians will apply for their Canada Pension Plan or Old Age Security once they turn 64 because they receive a letter in the mail about their eligibility in the following year. This is tempting for many reasons, from worrying about CPP’s insolvency to needing money quick.

That said, if it is possible, it would be wise to defer CPP or OAS withdrawals for another couple of years.

Why? An increase in benefits.

Ultimately, if you take your CPP before 65, your pension will be smaller by up to 36 percent. However, if you receive your pension after 65, then your pension could swell by up to 42 percent by age 70.

6. Withdrawing from Life Insurance

Soon after you had children, you purchased a 20-year term life insurance policy. You didn’t die after 20 years (yay!), but you decided to renew anyway for another 20 years. Once again, you didn’t perish (yay!), so what now?

Well, you have two options. The first is to renew again so that when you pass away, you leave your children with a large windfall. The second is to use the cash from the premiums you paid after all these years. This is a great option because it’s a nice injection of loonies and toonies tax-free.

7. Home Equity as Your Backup Plan

If you purchased a home even a decade ago, you possibly accrued equity. Although you should never use your house a retirement fund, you can still tap into the equity as a backup plan. Or, perhaps you can take advantage of a reverse mortgage. If all other options fail, you can use your home.

8. A Part-Time Job

Studies have found that many people die as soon as they retire. Why? The reasons vary, from not exercising enough to not have any purpose anymore. To avoid stagnancy and just making every day of the week as if it were a Saturday, a part-time job is a reasonable solution.

For 10 to 15 hours a week, you can earn some extra income with a part-time job, whether it is checking out customers or working in a call centre. Any little bit of money helps.

Everyone has their own idea of what their retirement will look like. Some want to travel the world and see Venice, Paris, and Bruges. Others just want to relax and spend time with their grandchildren. It is different for everyone.

What are your expectations of retirement? That is the $64,000 question, isn’t it?

Well, before you toss your briefcase into the sewer, remove your necktie, and quit your day job, it is an important question to answer before anything else. Whether it is being adventurous or just enjoying your free time doing nothing at all, you need to know what you will be doing for the next 10, 20, or 30 years. So, what do your winter years look like?